West Texas Gas Price Drops Below Zero as Pipeline Outages Disrupt Supply

Time to read
1 minute
Read so far

West Texas Gas Price Drops Below Zero as Pipeline Outages Disrupt Supply

Posted in:
Gas valve against the flag of Texas (© Shutterstock/Sega_K)
Gas valve against the flag of Texas (© Shutterstock/Sega_K)

The natural gas spot price in west Texas fell below zero, forcing the producers to foot up the unloading fee, World News Era reported on October 26, 2022. The events came at a time when Europe is grappling with record-high energy prices following a supply decline by the Russian state-owned supplier, Gazprom.

According to the report, the negative gas prices came when surging production at the Permian Basin region coincided with pipeline constraints, with outages at liquefied natural gas terminals critical for US gas export overseas, effectively curtailing the shipment of the products.

According to S&P Global, on Tuesday, the gas stored for the next-day delivery at the Waha trading hub went down by $2.25 million British thermal units at the Intercontinental Exchange.

"You have too much production [and] you don't have enough avenues to get that production out," said Stephen Schork, an industry analyst, of the negative price at the Waha hub. "You have to pay people now to take this production away from you," he added.

Analysts have weighed on this matter and said the price differences underlined the regional segmentation of gas markets.

Fire erupted at the Freeport LNG terminal on the coast of Texas in June; this export facility has not been operating. In addition, there are scheduled maintenance operations on the Gulf Coast Express and El Paso Natural Gas pipelines operated by Kinder Morgan.

According to Mark Callahan, the director of America natural gas and power price reporting at S&P Global Commodity Insights, the maintenance process launched this week is expected to take a few days.

Europe recently reduced the immediate delivery prices as storage sites are nearing capacity. Due to the warm weather conditions, traders offload supplies even as people raise issues about shortages this winter.

This decline has been witnessed in the prices at Waha; the decline was witnessed 9 and 31 times in 2020 and 2019, respectively. The reduction comes at a time Europe is preparing for potential winter shortages due to cuts in supplies by Russia as revenge for western sanctions.

Add new comment

The content of this field is kept private and will not be shown publicly.

Plain text

  • No HTML tags allowed.
  • Lines and paragraphs break automatically.
  • Web page addresses and email addresses turn into links automatically.
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.